As the bus driver on the 94 was doing his Lewis Hamilton impersonation last night, my mind turned to the subject of risk, and how it connects to entrepreneurship/social entrepreneurship. Having survived the journey home, I opened my inbox to find an e-mail newsletter from the Future Innovators team at NESTA; and the subject? You guessed it: risk.

Of particular interest is the article by Bill Lucas, entitled "Learning is a risky business" which has interesting things to say about mistakes, learning and encouraging a culture of risk-taking. The latter is something which the UK is often viewed as being deficient in as compared to, say, the US, where failure is embraced (even celebrated) by entrepreneurs in all fields. Tim Smit of the Eden Project is often quoted as saying you should have at least three mistakes on your CV (except his word is rather stronger than ‘mistake’) but he’s a rare example of a British entrepreneur being open about risk, failure and learning.

I liked Dr Lucas’ three-step risk-taking: Ready (appraise courses of action by instinct & analysis); Go (give it a go) and Steady (learn / embed the lessons)….which bears some similarity to the action learning cycle which powers the SSE programme and other practical learning methodologies. He also talks about how to allow safe risks to be taken (in an educational context) which concentrates on role-modelling, peer support and learning. It’s also about confidence; as one article on entrepreneurs puts it, they should have "Enough self-confidence to take carefully calculated, moderate risks"

Googling ‘risk’ or ‘risk strategy’ will only take you into the frenzied world of near-professional board games, but there are some useful links and articles out there.

– Risk is all: sample quote: "What risks can you not afford to take in your business? How will you ensure you actually increase the amount of risk you take?"

– Risk in Entrepreneurship: "But even for the brave-of-heart, the reality of risk that comes with
that leap — when the last paycheck is left behind and life is reduced
to a single do-or-die mission — hits like ice water."

– Low-risk entrepreneurship: "I do think that entrepreneurship is becoming exponentially easier over time alongside advances in technology."

– Mindful Entrepreneur on Risk: "entrepreneurship should be part of everyone’s life in at least some way"

for Risk Assessment, you can see Business Link’s decent overview, or take the Risk Assessment Quiz!! (oh yes)

It’s an interesting topic to consider in the social sphere as well, given that (at times) there seems to be an inherent conflict at the heart of social enterprise….namely the quest for sustainability (aka less failure) alongside the need for more enterprise and innovation (aka more risk). A simplistic summary that might be, but one that could make for an interesting debate about how we measure "success" of the movement, and in creating a more inclusive and entrepreneurial UK.

Alternatively, if you want to think about risk on a bigger scale, here’s Stephen Petranek on 10 Ways the World Could End. Go careful….

SSE were present at the launch of a new report from our neighbours/landlords the Young Foundation on ‘the challenge of growing social innovations’. The report, titled In and out of sync, draws together eleven case studies and a fair number of academic studies, evaluations and articles into a coherent and cogent whole. It provides a useful introduction and guide to the whole issue of scaling up.

Obviously, it’s something that SSE has discussed often, both with particular students / organisations at phases of development, and also more generally from our own experience and the way the debate is framed. See previous blog posts on Scaling your replicable pilot franchise (which pointed to one of the YF case studies actually) and the Long Tail of Social Entrepreneurship for example. The latter, particularly, covers some similar ground, in that it talks of scaling up a movement and a network, rather than a small number of organisations [brief slideshow here]. There’s obviously much else been written in this field as well, from classic founder syndrome analysis (see John Bird / Big Issue in the report) to flawed business model (see Aspire) to the need to marry up supply and demand (see every successful innovation…), and, for sector-heads, there’s nothing hugely revelatory.

What’s interesting to me is that coverage of the report ( Third Sector for example), didn’t pick up particularly on the fairly direct critique of the social enterprise organisational model; more generally, it picked up on the need to share ideas, rather than scale an organisation in a difficult, flawed attempt to achieve significant social impact (which is also nothing new: it’s an oft-spoken mantra that "it’s amazing what you can get done if you don’t mind who takes the credit…"). These two paragraphs, for example, give a flavour:

"there are many reasons for being sceptical about the assumptions that social and economic goals can easily be integrated and that growing organisations is the best way to achieve social impact. Although in some cases social and economic objectives have been combined in a single organisation (as, for example, with Language Line or The Big Issue) there are often sharp trade-offs between the goals of social impact and the goal of achieving a financial or reputational return. For example, economic imperatives may point organisations towards rejecting difficult clients, avoiding risk and avoiding radical advocacy. By contrast, social objectives may mean chasing down hard problems and taking risks that others will not consider. Also, when it comes to deciding on an optimum scale, economic and social considerations can point in opposite directions. Economics provides one lens for thinking about scale as a balance between economies and diseconomies of scale (and scope). But social returns to scale may point in a different direction…

There can be no doubt that many social innovations have been associated with pioneer organisations (e.g. Amnesty, OU, Greenpeace, BRAC). However, there are surprisingly few
examples of major social innovations that are strongly associated with organisational growth
(e.g. the many innovations associated with human rights, ecology, feminism, disability rights, micro-credit or intermediate technology emerged from a huge diversity of different organisations). Indeed it sometimes appears as if innovators themselves, and their funders, sometimes risk an illusion of control, believing that this is the best way to achieve impact when often it could be achieved through looser approaches to diffusion."

Interesting stuff. As an organisation which is itself a franchise (which the report categorises as ‘directed diffusion’), it’s good to read that the wider influencing role of SSE should be recognised as growth of a social innovation in this context as well. Even if such influencing / advocacy is more difficult to measure, it’s important to track and understand (such as other organisations taking up the action learning approach for third sector leaders). And as we’ve long contended, the approach to social entrepreneurship we back is one that focuses on the outcomes, not the organisational model; on the impact, and not the methods; with each social entrepreneur choosing the structure, governance, financing most appropriate to them achieving their mission and, should the time come, the most appropriate form of diffusion / replication. As well as one that incorporates personal as well as organisational development, multiplying the potential benefits.

This report also throws down a challenge to those investment bodies and funders whose focus is on scaling up organisations and achieving a return (social or financial) based on clear metrics. In a small number of cases, this may be possible, but more innovative funding and investment may well be required…something that may look less like commercial investment than is currently the case.